UBS Sees Copper As "Highest-Conviction" Theme, Names Four Miners To Ride Supply Squeeze

Copper futures in London closed near record highs to end the week, as desks at JPMorgan and Deutsche Bank have recently warned that dwindling global supplies of the industrial metal could produce another leg higher.

Théa Ziegler, a member of UBS' US equity advisory sales team, wrote in a note on Friday afternoon that "copper remains one of the highest-conviction commodity themes."

Ziegler said demand from electrification and data-center construction is expected to outpace supply growth and support high prices, as hopes for lower prices fade in a theme best described as scarcity.

"Copper remains one of the highest-conviction commodity themes, with electrification, data-center buildouts and persistent supply constraints continuing to support a constructive long-term outlook. The key takeaway for investors is that supply growth is expected to lag demand growth for several years, underpinning elevated copper prices despite near-term uncertainty around tariffs and trade policy," Ziegler said.

Natalia Corfield, JPMorgan's head of Latin America corporate credit research, noted new developments this week from South America and warned that a strike at Centinela, a major source of Antofagasta's copper production in Chile, has begun and could soon impact production.

Separately, Bloomberg cited the two unions behind the labor action, which warned that Centinela could begin reducing copper production within about two weeks if the walkout continues.

Add major producer Chile's copper woes to the scarcity theme. Deutsche Bank's head of metals research, Daniel Ghali, warned last month that global copper inventories have fallen to "unprecedented lows," blaming some of that on US and Chinese stockpiling, which is squeezing supplies elsewhere.

Ghali has a new 2Q27 price target for copper in London of $22,050 a ton.

Here's the chart that shows the copper supply gap that will persist into the early 2030s.

UBS's Ziegler concluded: "Against that backdrop, the team continues to favor copper-linked miners with meaningful leverage to the theme. Preferred exposures include Freeport-McMoRan, First Quantum, Hudbay and Teck Resources, all of which are viewed as well positioned to benefit from what is expected to be a multi-year copper upcycle driven by structural demand and a constrained supply response."